Correlation Between Turning Point and Xunlei

Can any of the company-specific risk be diversified away by investing in both Turning Point and Xunlei at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Turning Point and Xunlei into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Turning Point Brands and Xunlei Ltd Adr, you can compare the effects of market volatilities on Turning Point and Xunlei and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Turning Point with a short position of Xunlei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turning Point and Xunlei.

Diversification Opportunities for Turning Point and Xunlei

0.37

Correlation Coefficient

Turning Point  Xunlei

Weak diversification

The 3 months correlation between Turning and Xunlei is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Turning Point Brands and Xunlei Ltd Adr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xunlei Ltd Adr and Turning Point is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Turning Point Brands are associated (or correlated) with Xunlei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xunlei Ltd Adr has no effect on the direction of Turning Point i.e., Turning Point and Xunlei go up and down completely randomly.

Pair Corralation between Turning Point and Xunlei

Considering the 90-day investment horizon Turning Point Brands is expected to generate 0.48 times more return on investment than Xunlei. However, Turning Point Brands is 2.1 times less risky than Xunlei. It trades about 0.33 of its potential returns per unit of risk. Xunlei Ltd Adr is currently generating about 0.12 per unit of risk. If you would invest  3,860  in Turning Point Brands on September 14, 2024 and sell it today you would earn a total of  2,187  from holding Turning Point Brands or generate 56.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Turning Point Brands  vs.  Xunlei Ltd Adr

Turning Point Brands

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Turning Point Brands are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Turning Point sustained solid returns over the last few months and may actually be approaching a breakup point.

Xunlei Ltd Adr

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xunlei Ltd Adr are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, Xunlei unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Turning Point and Xunlei

The main advantage of trading using opposite Turning Point and Xunlei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Turning Point position performs unexpectedly, Xunlei can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Xunlei will offset losses from the drop in Xunlei's long position.

The idea behind Turning Point Brands and Xunlei Ltd Adr pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Share Portfolio module to track or share privately all of your investments from the convenience of any device.